Mortgage Broker Ping Pong - It's the Interest Rate Game - Do You Know How to Play to Sell?Posted by Walton Workman on February 15th, 2021 As a large financial company, you might be guaranteed to enter the ping-pong interest game. Are you prepared and that means you lower your probability of losing the sale, without losing your commission as well? Let make sure by looking at the much too familiar scenario. A large financial company quotes a possible borrower the most effective rate offered at that period. The broker has answered all of the questions and concerns of his / her clients and disclosed all the relevant points. The broker has explained the weaknesses in the borrower's loan application and guided and helped the borrower(s) to resolve those issues. The broker also assisted the borrower in acquiring the right paperwork, helped them stay away from the usual pitfalls and assisted them in piecing together a precise and finish loan file. The mortgage loan officer then submits this loan with a lender after discussing using the borrower the causes for choosing that lender. Subsequently that loan commitment is obtained. Equipped using this loan commitment, the borrower proceeds to find a home. After many weeks, even months, he, she or they serve them with the right property. The mortgage loan officer now assists the borrower with some other issues, helps them identify legal counsel or even a notary public and manages other outstanding issues. A few weeks, occasionally days prior to the completion date the borrower goes to her or his bank and either intentionally or unintentionally inquires in regards to the bank's interest. The well-trained bank employee probes and realizes the monthly interest where the borrower's loan has become approved. Magically, immediately, go now reduced rates are agreed to that borrower. Borrower informs the mortgage broker in regards to the lower rate and threatens to take his, her or their business on the bank because the same bank that the borrower failed to bother asking before is now offering several basis points less in the interest. The frustrated large financial company succumbs towards the pressure, very often stopping his or her own finder's fee to buy the rate down to the borrower, only to find out that borrower went back towards the bank and negotiated even a reduced rate. That could be the ping-pong rate of interest game. It's a casino game that many banks lose. Strictly speaking, there is not anything wrong with this process. Banks consider the position they are free to offer deals to gain business. And borrowers feel of their rights to play the ping pong rate of interest game to save lots of what usually comes from just a couple of dollars. Begin with constructive strategies in the first place with the home loan search. There aren't magic pills with this one. The answer, when there is one, it is based on full and finish disclosure at the outset of your company relationship and insisting with an unequivocal agreement through the borrower to see this kind of situation. There is little a large financial company can perform of a system which allows financial institutions to undercut competition when they become aware from the competitor's price. Is it fair? Of course it isn't. It is my experience that many people are well meaning, reasonable, and ethical folks. I have found that by outlining this potential scenario upfront and achieving a commitment from clients at the start in the relationship helps tremendously. Take the time to explain to your visitors the various types of mortgages and also the restrictions and limitations which can be built into those mortgages. Explain how most banks aren't obliged to clarify the ins and outs of such forms of mortgages which could stop advantageous for a clients or that take away their freedom to create prepayments etc. Is this a foolproof solution? Not really. However it significantly enhances your chances of retaining clients you've worked challenging to serve as opposed to losing the sale when faced using this type of ping-pong match.Like it? Share it! More by this author |